CMS pre­scribes pay­ment fix to re­sus­ci­tate US an­tibi­ot­ic in­dus­try

As the UK ex­per­i­ments with a sub­scrip­tion-style pay­ment sys­tem to re­sus­ci­tate the fledg­ling an­tibi­ot­ic in­dus­try — in the Unit­ed States, the Cen­ters for Medicare & Med­ic­aid Ser­vices (CMS) is work­ing on re­struc­tur­ing the pay­ment ap­pa­ra­tus for new an­tibi­otics to re­vi­tal­ize an­timi­cro­bial de­vel­op­ment and res­cue ex­ist­ing man­u­fac­tur­ers.

For one of the biggest threats to glob­al health, the li­on’s share of an­tibi­ot­ic de­vel­op­ment is tak­ing place in a hand­ful of labs of small bio­phar­ma com­pa­nies as a ma­jor­i­ty of their larg­er coun­ter­parts fo­cus on more lu­cra­tive en­deav­ors. In re­cent months, a hand­ful of an­tibi­ot­ic de­vel­op­ers — in­clud­ing Achao­gen and Tetraphase — have seen their val­ue go up in smoke as fee­ble sales frus­trate growth.

It is no se­cret that the in­dus­try play­ers con­tribut­ing to the ar­se­nal of an­timi­cro­bials are fast dwin­dling. Drug­mak­ers are en­ticed by green­er pas­tures, com­pared to the long, ar­du­ous and ex­pen­sive path to an­tibi­ot­ic ap­proval that of­fers lit­tle fi­nan­cial gain as treat­ments must be priced cheap­ly, and of­ten lose po­ten­cy over time as mi­crobes grow re­sis­tant to them. Con­se­quent­ly, there have been no new class of an­tibi­otics ap­proved since the 1980s — and to­day, rough­ly 700,000 deaths an­nu­al­ly are at­trib­uted to drug-re­sis­tant bac­te­ria, ac­cord­ing to the WHO.

Medicare ben­e­fi­cia­ries ac­count for the ma­jor­i­ty of both new an­timi­cro­bial re­sis­tance (AMR) cas­es and fa­tal­i­ties in the Unit­ed States, CMS ad­min­is­tra­tor Seema Ver­ma not­ed in the jour­nal Health Af­fairs on Fri­day.

In the Unit­ed States, in­cen­tives are al­ready in place to push drug­mak­ers to de­vel­op an­tibi­otics, such as fund­ing sup­port through the Bio­med­ical Ad­vanced Re­search and De­vel­op­ment Au­thor­i­ty (BAR­DA) and reg­u­la­to­ry re­forms such as the Lim­it­ed Pop­u­la­tion Path­way for An­tibac­te­r­i­al and An­ti­fun­gal Drugs (LPAD)  — but the in­dus­try is clam­or­ing for the pas­sage of “pull in­cen­tives,” or pol­i­cy mea­sures to in­crease the val­ue of a mar­ket­ed an­tibi­ot­ic by re­ward­ing drug­mak­ers on­ly af­ter their an­tibi­ot­ic is ap­proved.

Ex­ist­ing in­cen­tives, “while well-in­ten­tioned…ap­pear to have been in­suf­fi­cient, as they fo­cused ex­clu­sive­ly on bol­ster­ing the de­vel­op­ment pipeline with­out re­mov­ing the block­age cre­at­ed by is­sues with pay­ment,” Ver­ma con­ced­ed.

To rem­e­dy the ex­ist­ing set of “mis­aligned in­cen­tives,” the CMS has fi­nal­ized new rules to re­form an­tibi­ot­ic pay­ments from 2020.

Un­der the cur­rent sys­tem, hos­pi­tals bun­dle to­geth­er the costs of all the ser­vices for a giv­en di­ag­no­sis in­to what is called a di­ag­no­sis-re­lat­ed group (DRG). Con­gress im­ple­ment­ed the DRG sys­tem in 1983 to con­trol hos­pi­tal re­im­burse­ments by re­plac­ing ret­ro­spec­tive pay­ments with prospec­tive pay­ments for hos­pi­tal charges. The CMS as­signs each DRG a weight, which in con­junc­tion with hos­pi­tal-spe­cif­ic da­ta, is used to de­ter­mine re­im­burse­ment.

This sys­tem tends to in­cen­tivize hos­pi­tals to pre­scribe cheap­er, gener­ic an­tibi­otics that are not en­gi­neered to tack­le drug-re­sis­tant in­fec­tions. “This, cou­pled with the com­par­a­tive­ly low­er rev­enue ceil­ing for an­tibi­otics due to their low pre­scrip­tion vol­umes, has caused new an­tibi­otics to be­come en­dan­gered in­no­va­tions,” she wrote.

CMS is, there­fore, chang­ing the sever­i­ty lev­el des­ig­na­tion from non-CC to CC for codes spec­i­fy­ing AMR — the “CC” des­ig­na­tion in­di­cates the pres­ence of a com­pli­ca­tion or co­mor­bid­i­ty in a giv­en in­pa­tient case that re­quires the hos­pi­tal to ded­i­cate more re­sources for the care of that pa­tient than typ­i­cal­ly re­quired for the spe­cif­ic di­ag­no­sis. Clas­si­fy­ing drug re­sis­tance in this way will com­pel high­er pay­ments to hos­pi­tals treat­ing pa­tients with AMR, craft­ing a path­way for doc­tors to pre­scribe ap­pro­pri­ate new an­tibi­otics with­out dis­rupt­ing hos­pi­tal bud­gets. CMS will al­so con­tin­ue to “ex­plore whether ad­di­tion­al re­forms are need­ed to re­cal­i­brate DRGs to bet­ter ac­count for the clin­i­cal com­plex­i­ty of drug re­sis­tance,” Ver­ma said.

An­oth­er mea­sure be­ing tak­en by the CMS is to amend the New Tech­nol­o­gy Add-On Pay­ments (NTAPs) sys­tem as it re­lates to AMR, which is “unique­ly di­min­ished for an­tibi­otics.” NTAP was cre­at­ed in 2000 as a “time-lim­it­ed en­hanced pay­ment for new drugs or de­vices” to smooth the en­try for fresh prod­ucts while pro­vid­ing time for the rel­e­vant DRG to re­cal­i­brate to ac­com­mo­date pay­ment for new prod­ucts. “How­ev­er, stake­hold­er feed­back near­ly two decades lat­er sug­gests that im­ple­men­ta­tion of the NTAP through rule­mak­ing by CMS — both in terms of el­i­gi­bil­i­ty cri­te­ria and pay­ment — is in­suf­fi­cient to sup­port in­no­va­tion for an­tibi­otics,” Ver­ma ac­knowl­edged.

This is part­ly due to the fact that an­tibi­ot­ic de­vel­op­ers strug­gle to meet the agency’s “sub­stan­tial clin­i­cal im­prove­ment” cri­te­ria as they are tra­di­tion­al­ly giv­en the green light by the FDA on the ba­sis of tri­als that show their prod­ucts are non-in­fe­ri­or to ex­ist­ing an­tibi­otics. “(H)alf of pre­vi­ous an­tibi­ot­ic ap­pli­ca­tions for NTAPs have been re­ject­ed be­cause of a fail­ure to sat­is­fy this spe­cif­ic cri­te­ri­on,” Ver­ma said.

An­oth­er is­sue is that the pay­ment lev­el for the NTAP is set at 50% of ei­ther the cost of the new prod­uct or the dif­fer­ence be­tween the DRG pay­ment and the to­tal cov­ered cost of the par­tic­u­lar case. How­ev­er, this thresh­old is in­suf­fi­cient to in­cen­tivize hos­pi­tals to file for an NTAP pay­ment due to the low an­tibi­ot­ic pre­scrip­tion vol­umes for re­sis­tant in­fec­tions.

To rem­e­dy these struc­tur­al chal­lenges, the CMS — the Unit­ed States’ largest pay­er — has fi­nal­ized an al­ter­na­tive NTAP path­way that does not in­clude the SCI cri­te­ria and in­creas­es the NTAP from 75% from 50% for new an­tibi­otics that have been grant­ed as Qual­i­fied In­fec­tious Dis­ease Prod­uct (QIDP) sta­tus.

Last year, for­mer FDA com­mis­sion­er Scott Got­tlieb sug­gest­ed a “li­cens­ing mod­el” in which acute care in­sti­tu­tions that pre­scribe an­timi­cro­bial med­i­cines would pay a fixed li­cens­ing fee for ac­cess to these drugs, grant­i­ng them the right to use a cer­tain num­ber of an­nu­al dos­es.

Forge Bi­o­log­ics’ cGMP Com­pli­ant and Com­mer­cial­ly Vi­able Be­spoke Affin­i­ty Chro­matog­ra­phy Plat­form

Forge Biologics has developed a bespoke affinity chromatography platform approach that factors in unique vector combinations to streamline development timelines and assist our clients in efficiently entering the clinic. By leveraging our experience with natural and novel serotypes and transgene conformations, we are able to accelerate affinity chromatography development by nearly 3-fold. Many downstream purification models are serotype-dependent, demanding unique and time-consuming development strategies for each AAV gene therapy product1. With the increasing demand to propel AAV gene therapies to market, platform purification methods that support commercial-scale manufacturing of high-quality vectors with excellent safety and efficacy profiles are essential.

Luke Miels, GSK chief commercial officer

GSK picks up Scynex­is' FDA-ap­proved an­ti­fun­gal drug for $90M up­front

Editor’s note: This is a live story and will be updated.

GSK is dishing out $90 million cash to add an antifungal drug to its commercial portfolio, in a deal spotlighting the pharma giant’s growing focus on infectious diseases.

The upfront will lock in an exclusive license to Scynexis’ Brexafemme, which was approved in 2021 to treat a yeast infection known as vulvovaginal candidiasis, except in China and certain other countries where Scynexis already out-licensed the drug.

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Feng Zhang (Susan Walsh/AP Images)

In search of new way to de­liv­er gene ed­i­tors, CRISPR pi­o­neer turns to mol­e­c­u­lar sy­ringes

Bug bacteria are ruthless.

Some soil bacteria have evolved tiny, but deadly injection systems that attach to insect cells, perforate them and release toxins inside — killing a bug in just a few days’ time. Scientists, on the other hand, want to leverage that system to deliver medicines.

In a paper published Wednesday in Nature, MIT CRISPR researcher Feng Zhang and his lab describe how they engineered these syringes made by bacteria to deliver potential therapies like toxins that kill cancer cells and gene editors. With the help of an AI program, they developed syringes that can load proteins of their choice and selectively target human cells.

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See­los Ther­a­peu­tics 'tem­porar­i­ly' stops study in rare neu­ro dis­or­der for busi­ness rea­sons

Microcap biotech Seelos Therapeutics is halting enrollment of its study in spinocerebellar ataxia type 3 (also known as Machado-Joseph disease) because of “financial considerations,” and in order to focus on other studies, the company said today, adding that the pause would be temporary.

The study will continue with the patients who have already enrolled, and the data from them will be used to decide whether to continue enrolling others in the future.

Mathai Mammen, FogPharma's next CEO

Math­ai Mam­men hands in J&J's R&D keys to lead Greg Ver­dine’s Fog­Phar­ma 

In the early 1990s, Mathai Mammen was a teaching assistant in Greg Verdine’s Science B46 course at Harvard. In June, the former R&D head at Johnson & Johnson will succeed Verdine as CEO, president and chair of FogPharma, the same month the seven-year-old biotech kickstarts its first clinical trial.

After leading R&D at one of the largest drugmakers in the world, taking the company through more than half a dozen drug approvals in the past few years, not to mention a Covid-19 vaccine race, Mammen departed J&J last month and will take the helm of a Cambridge, MA biotech attempting to go after what Verdine calls the “true emperor of all oncogenes” — beta-catenin.

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FDA ap­proves Nar­can opi­oid over­dose re­ver­sal spray for over-the-counter sale

The FDA today approved Emergent BioSolutions’ Narcan brand naloxone nasal spray for over-the-counter sales. The nod was expected and comes on the heels of a unanimous 19-0 advisory committee vote in favor of approval last month.

The move to OTC means the opioid overdose reversal agent will now be available on grocery, convenience and gas stations shelves, as well as potentially for purchase online.

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A month after revealing plans to concentrate on its late-stage immuno-neurology pipeline, Alector is trimming its headcount by 11%.

The layoffs will impact around 30 employees across the organization, the company disclosed in an SEC filing, adding that the plan will “better align the company’s resources” with the new strategy. With $712.9 million in cash, cash equivalents and investments as of the end of 2022, Alector believes the reserves will now get it through 2025.

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Hugo Peris, Spiral Therapeutics CEO

Hear­ing-fo­cused biotech grabs trio of pro­grams from Oton­o­my's fire sale

Otonomy may be shutting down, but the lessons learned there will live on at another biotech working on new treatments for hearing loss.

San Francisco-based Spiral Therapeutics has bought certain assets related to three of Otonomy’s programs, ranging from data, patent rights, and know-how to inventory. That includes data around Otonomy’s twice-failed lead program, OTO-104 (Otividex), a sustained-exposure formulation of dexamethasone.

CSL CEO Paul McKenzie (L) and CMO Bill Mezzanotte

Q&A: New­ly-mint­ed CSL chief ex­ec­u­tive Paul McKen­zie and chief med­ical of­fi­cer Bill Mez­zan­otte

Paul McKenzie took over as CEO of Australian pharma giant CSL this month, following in the footsteps of long-time CSL vet Paul Perreault.

With an eye on mRNA, and quickly commercializing its new, $3.5 million-per-shot gene therapy for hemophilia B, McKenzie and chief medical officer Bill Mezzanotte answered some questions from Endpoints News this afternoon about where McKenzie is going to take the company and what advances may be coming to market from CSL’s pipeline. Below is a lightly edited transcript.